When it comes to motor vehicles, it really does seem like electric cars will be the future. As nations around the world clamp down on fossil fuels that contribute to the global climate crisis, renewables – and innovations that are powered by them – are taking over.
It comes as no surprise, then, that electric cars have seen a huge adoption rate over recent years. Car manufacturers are committing to solely developing them in the future as opposed to their fossil fuel-powered counterparts, and manufacturing has become cheaper and more efficient, driving down their price. Despite the recent leaps, however, the cost of an electric vehicle is still significantly higher than traditional vehicles, which holds many people back from making the switch.
But that could all change very soon. According to a study by BloombergNEF, all-electric vehicles will cost the same as vehicles powered by fossil fuels by 2027. The forecast, which is more conservative than previous reports that placed the date at 2024, predicts that falling costs of batteries will place the more eco-friendly alternatives in direct competition for the first time ever in just 6 years.
“Falling battery prices and the development of optimized platforms lead the rapid decline in BEV [Battery Electric Vehicle] costs. An optimal vehicle design, produced in high volumes, can be more than a third cheaper by 2025 compared to now.” states the report.
Many car manufacturers are firmly in the race to produce cheap electric vehicles, with high-profile companies such as Audi stopping all development into combustion engines. Tesla, an electric-only car manufacturer that burst into the scene with impressive technology at competitive prices, now leads as the world’s top vehicle production company by market cap, holding a staggering ~$800 billion cap compared to Toyota’s ~$200 billion in second place. It is clear many want a piece of the pie, but it remains to be seen whether other companies can compete.
Although the production of both materials and electricity makes electric vehicles still far from carbon-neutral, they are a far better alternative than the emissions produced by combustion engines. A meta-analysis of electric cars showed that, over their lifetime, electric cars produce an average of 50 percent fewer emissions than a traditional car. Currently, it is still better for the environment to buy second-hand cars than a brand new electric vehicle, but as combustion engines are phased out, it is likely that electric will be the only direction to go.